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EXCEL - IDEA: XBRL DOCUMENT - BIOSHAFT WATER TECHNOLOGY, INC.Financial_Report.xls
10-Q/A - AMENDED QUARTERLY REPORT - BIOSHAFT WATER TECHNOLOGY, INC.bshf_10qa.htm
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EX-31.2 - CERTIFICATION - BIOSHAFT WATER TECHNOLOGY, INC.bshf_ex312.htm
EX-31.1 - CERTIFICATION - BIOSHAFT WATER TECHNOLOGY, INC.bshf_ex311.htm
EX-32.2 - CERTIFICATION - BIOSHAFT WATER TECHNOLOGY, INC.bshf_ex322.htm
EX-32.1 - CERTIFICATION - BIOSHAFT WATER TECHNOLOGY, INC.bshf_ex321.htm
v2.4.0.6
LOANS PAYABLE
3 Months Ended
Jul. 31, 2012
Notes  
LOANS PAYABLE

NOTE 3 - LOANS PAYABLE

 

On August 11, 2008, the Company secured a loan payable of $500,000 accruing interest at 15%, secured by the assets of the Company, subject to a 3% financing fee and repayable on the one year anniversary date of the agreement. 

 

On February 13, 2012, the terms of the loan were changed to reflect a conversion feature and extend the maturity date to August 11, 2012. The loan is convertible into shares of the Company’s common stock, up to 20,000,000, at a price of $0.025 per share. Accrued interest related to this loan is $309,923 as of July 31, 2012.

 

The Company accounts for the fair value of the conversion feature in accordance with ASC 815-15 “Derivatives and Hedging; Embedded Derivatives” which requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible loan. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company valued the embedded derivative using the Black-Scholes pricing model. On February 13, 2012, the fair value of the conversion feature was recorded as a derivative liability and a discount to the convertible loan of $1,363,664 and $500,000, respectively. Amortization of the debt discount was $250,000 and zero for the three months ended July 31, 2012 and 2011, respectively.  As of July 31, 2012, there is no remaining debt discount on the loan.

 

The derivative liability is revalued each reporting period using the Black-Scholes model. The Company estimated the fair value of the derivative liability using the Black-Scholes model on the July 31, 2012 and April 30, 2012 reporting dates using the following assumptions:

 

.

July 31, 2012

 

April 30, 2012

Exercise price

$0.025

 

$0.025

Risk free interest rate

0.7%

 

1.4%

Expected dividend yield

0%

 

0%

Volatility

56%

 

161%

Expected life of options

.03 years

 

.5 years

 

During the three months ended July 31, 2012 and 2011, the Company recorded a gain on the change in fair value of derivative liability of $1,893,922 and zero, respectively.

 

On March 6, 2009, the Company secured a loan payable of $25,000 accruing interest at 15%, due March 6, 2010 and secured by the assets of the Company.  The term of this loan has been extended to September 6, 2012. Accrued interest related to this loan is $12,827 as of July 31, 2012.

 

As of the date of the filing of these financial statements, both of the loans payable disclosed are in default for non-payment.